Manufacturing Audience Helps Scale Faster -- But Has Own Pitfalls and Risks

One of the usual objections to content is the challenge of scaling everything: production, distribution and monetization. In today’s article, we’ll touch on distribution, or put another way: growing your audience, especially through content.

During Web 1.0, publishers realized that before long, trying to grow their own-and-operated property would hit a wall. Some launched networks so that they can sell ads on third-party sites. Meanwhile, some more astute players noticed that they could skip the own-and-operated strategy and simply aggregate audiences -- and ad inventory -- across a plethora of websites and sell ads against that audience. Hence the ad network.

An evolution of this trend was the ad representation firm, which, instead of simply intermediating between advertisers (or agencies) and publishers, would formally sign deals with publishers to manage their relationships with buyers. This had pros and cons for all parties involved. One of the earlier rep firms – Winstar Interactive – let newer players like Gorilla Nation prosper. Oddly enough, Gorilla Nation has come full circle and evolved into Evolve Media (obvious pun) and now focuses on its set of owned-and-operated sites for more control, higher margins and building equity.

World, meet Video

With the world moving to video, we have seen an evolution of ad networks from display to video, but most ad rep firms have stood still, mainly due to the fact that video calls for a distribution over destination strategy. In other words, the margins simply don’t make sense for most ad rep firms to simply duplicate their Web 1.0 strategy onto video.

- Content networks such as Next New Networks (sold to Google’s YouTube unit last year), Revision3, as well as more recent upstarts like Collective, Maker’s Studio, Fullscreen etc.

We’ll touch on the latter, content networks.

Scale, baby scale…

For purposes of disclosure, one could argue that broadly speaking, my company competes with these firms in that we “all create content” -- but by now, regular readers know that content is not a zero-sum game, so participants are not all that competitive.

In any case, when it comes to production and product strategy, we have adopted a more controlled strategy of fully owning the content we distribute instead of focusing on representation.

Either way, to their credit, such content networks are growing their audience by signing existing well-known talent. Last week, Revision3 signed Phil DeFranco, who was one of the charter producers on Maker’s roster when it launched a few years back, before leaving. We’ve seen this before, with Next New Networks and Revision3 swapping talent, or those networks signing and then releasing talent.

While critics may argue that these content networks are adopting a revolving door strategy to scale faster, as a content producer myself, I can surely attest to the challenges of scaling your audience when you want to fully own and control the content catalog’s quality.

Furthermore, these companies also produce their own content, so not all of their catalogs represent third-party content that is signed. However, I will admit that I think this strategy – while scalable – is not very defensive, as video has had a tendency to disappoint, causing talent to leave for greener pastures, taking their audience and (at least some if not all) of their back catalog with them.

Ultimately, I don’t think the answer to scale is “more content,” but rather, more distribution (or audience). And more distribution comes (sadly) not from better content per se, but more monetization. In other words, existing talent with a following will follow the money, and publishers with existing audiences will feature content if their revenue yield trumps their opportunity cost.

Finally, while many content producers are bootstrapped, Revision3 and Maker are venture-backed, so they can’t wait around for the marathon to end. They need to outrun one another from the bear.